By Esther Omosa and Fredwilly Nderitu
Introduction
The cotton industry is a key driver of job creation in Kenya, directly employing 21,000 people in the formal sector and over 30,000 in the informal sector (Ministry of Agriculture 2024). As the foundation of the textile and apparel industries, the cotton value chain consists of interconnected stages. These include production processes such as input provision, farming, harvesting, and ginning, and value addition activities such as spinning, weaving, knitting, apparel production, and the distribution of finished products. Despite its significance, the sector operates far below its potential due to under-utilized capacity in cotton production and limited value addition. This untapped potential presents opportunities to increase employment and improve livelihoods. Addressing existing challenges and leveraging opportunities through enhanced production, modernization, and value addition is essential to realizing the sector’s full potential for job creation and economic development. This blog examines how reviving cotton production and value addition would lead to job creation along its value chains.
Status of the Cotton industry
Driving jobs creation through cotton production
Land cultivated for cotton production has significantly declined from 28,267 hectares in 2015 to 8,585 hectares in 2022, accompanied by a steep drop in yields from 650 kg/ha to 127 kg/ha (Figure 1). This indicates a critical contraction in the sector’s productivity, with the decline directly impacting the supply of seed cotton available to ginneries, convert raw cotton into lint. With only 14 per cent of ginnery capacity utilized and eight
(8) out of 23 ginneries operational, the sector is severely under-performing, thus limiting its ability to create jobs. Consequently, lint production declined from 28,108 bales in 2015 to 3,019 bales in 2021. Operating at such low capacity with a potential to gin 140,000 bales annually at full capacity limits employment opportunities within ginneries and across the entire value chain.
Figure 1: Cotton industry trends (2015-2023)
Source of Data: AFA, FAO STAT, KNBS (2015-2023)1
Expanding jobs creation through cotton value addition
Cotton processing transforms lint into yarn through spinning, then into textiles through weaving, apparel manufacturing, and fabric production by textile factories and sewing enterprises. Kenya has 15 yarn-spinning mills with an estimated capacity of 148,000 spindles, but they operate at 40–50 per cent capacity due to low productivity and heavy reliance on imported yarn, which reached 103,586 bales in 2023. This importation supports a steady output of approximately 1,000 textile units annually between 2015 and 2023, highlighting limited domestic value addition and the need for improved efficiency. Textile distribution ensures finished products reach the domestic and international markets. Textile exports fluctuated between 9,000 and 18,000 units from 2015 to 2022 but rose to 33,536 units in 2023, indicating untapped potential to boost competitiveness and economic growth.
Tracing jobs along the value chain
Cotton farming employs approximately 140,000 smallholder farmers, yielding an average of 0.53 tons per hectare and representing only 10 per cent of the sector’s full potential. Ginneries employ 800-1,600 workers but operate at only 17-31 per cent capacity due to limited operations and seed cotton shortages. Yarning mills employ 178-370 workers, while the three textile factories employ 3,000 workers, processing 48,000 of their 100,000-bale capacity. Design and sewing enterprises, including 170 garment companies and 75,000 Small and Micro Enterprises (SMEs) operate at full capacity, providing tailoring, sewing and quality control jobs. Distribution involves 29 Export Processing Zones (EPZs) units, employing 37,750 in packaging, logistics, and marketing.
Challenges Facing the Cotton Industry Value Chain
Low and fluctuating cotton prices: Cotton farmers face volatile prices when selling seed cotton to ginneries, with pricing often failing to cover production costs. This leaves farmers struggling financially, reducing competitiveness, and hindering investment in cotton production.
Imports of used clothes: Importing used clothes limits the value addition potential. While it creates jobs and meets apparel demand, it undermines the domestic textile sector by flooding the market with cheaper alternatives.
Limited backward linkages: There is limited use of local raw cotton materials by the EPZs. Therefore, they do not maximize their potential to create jobs locally in upstream activities such as farming, processing, and logistics.
Technological and cost constraints: High operational costs due to the use of outdated technology and frequent mill and ginnery breakdowns hinder efficiency and production. The high cost of modernizing technology limits the ability to modernize operations, further reducing efficiency.
Opportunities in the Cotton Industry Value Chain
Investment in modern technology: Modernizing existing ginning and milling technology can improve operational efficiency. This will result in increased production capacity and technical jobs for skilled workers.
Approval of hybrid seeds (BT Cotton): The Government has approved the commercial cultivation of BT cotton, which is resistant to the destructive African Bollworm, and has issued 17 tons of seeds. This will help revitalize the cotton industry and textile production by boosting yields.
Market linkages and traceability systems: Setting up systems for traceability and transparency in raw cotton and textile markets will create jobs in logistics, ICT, and compliance auditing.
Conclusions and Recommendations
Kenya’s cotton value chain has significant untapped potential for job creation. By improving productivity, modernizing infrastructure, and enhancing value addition, the sector could generate more employment. However, its growth is hindered by underperformance at various stages of the value chain. To unlock this potential, there is a need to:
- Implement price stabilization mechanisms such as a guaranteed minimum price for seed cotton, ensuring farmers receive a consistent baseline price for their seed cotton despite market fluctuations.
- Enforce strict quality control measures against textile dumping from exporting countries.
- Incentivize local industries to improve the quality of raw materials and comply with international standards to enhance competitiveness, thereby promoting backward linkages.
- Provide tax incentives through the National Treasury for importing and installing new cotton processing technology.
